Fairchild Faces $315M Patent Infringement Charge

Fairchild Semiconductor of San Jose, Calif., must pay at least $105 million in damages -- possibly three times that amount -- having been found guilty of infringing two patents on power supply ICs held by Power Integrations Inc., also based in San Jose, in a North California district court.

Power Integrations said that based on the finding that Fairchild's infringement was wilful, the court could triple the level of damages specified by the jury. The jury also denied all counterclaims by Fairchild alleging patent infringement by Power Integrations.

Power Integrations intends to seek a permanent injunction against Fairchild selling more than 140 chips that Power Integrations claims are implicated in the decision.

The size of the damages claim relates to the long-running nature of the dispute, which dates back to 2004, although the current case was brought in 2009 after two patents were validated by the United States Patent and Trademark Office.

The jury found that Power Integrations does not infringe the Fairchild patent but that several power supplies containing chips made by System General Corp., a subsidiary of Fairchild, infringed US Patent Numbers 6,212,079 and 6,538,908.

The latest decision follows three previous findings of infringement against Fairchild and its System General (SG) subsidiary in cases brought by Power Integrations.

"Today’s decision marks the fourth time Fairchild and its SG subsidiary have been found to infringe our patents,” said Balu Balakrishnan, president and CEO of Power Integrations, in a statement. “We hope this latest finding and the accompanying damage award will cause Fairchild to finally re-examine their business practices and begin respecting the intellectual property that we have worked so hard to develop over the past 25 years."

Fairchild was approached for comment but had not responded by the time this article was posted.

I would think that when the first lawsuit was filed that it would have been prudent for Fairchild to implement a work-around for future products. The more times that the legal system rules against them while they continue infringing the patents, the higher the potential damages accumulate. There is also the possibility they will be forced to stop selling the infringing products.

This is not exactly correct, its only Wilful if you know about the patent. Its impossible when designing a new product to search every patent and see if you infringe. In fact if you do search and find a relevant patent you are obliged to work around it or it would be wilful infringment. Its recommended that engineers don't do patent searches for this reason, leave this up to the lawyers.

In this case it looks like Fairchild were served notice in 2004 that they infringed.

Wilful infringment is determined by discovery of emails, notes, and documents etc.

Your observations are quite correct. In my view there needs to be a seperate patent court system. We have seperate courts for bankruptcy, taxes, family law, small claims etc. which are all complex legal matters. Why not a seperate patent court system where the judges actually have some technical skills. Who would think a judge with an economics background would be able to come up with a correct decision on some highly technical electronics patent. The real shame is though that there are a lot of law firms that need to pay the rent on those high rise offices so they are going to defend their client to their (the client's) last dollar.

Your outline about willfulness is on-track but I want to emphasize that one really needs to do a thorough patent search or else you will be deemed to have willfully infringed. In other words, saying "I didn't know it was patented" is pretty much saying "Willfully guilty". It makes sense that it works that way because otherwise no one would ever do patent searches for fear of triggering triple damages.

Typically the best protection against a future patent lawsuit is to do a thorough search and to then document why each seemingly related patent is not actually infringed upon or was 'obvious' or had pre-existing art and wasn't valid in the first place. This is not easy since patents are purposely written to be legalese, vague and open ended.

A quick way to fix this would be for a patent court to just declare confusing, vague and open ended patents to be invalid. The guideline could be "inteligible to a panel of grad students." This would then pretty quickly cause patents to become clear and concise. I'm not holding my breath.

The current situation is just awful. It is sad when lawyers and judges will decide, after the fact, something about which they know little about and have purposely made as messy and complex as possible and it is sad when engineers have to spend significant percentages of their time reading and digesting non-sensical patents claims.

That's an excellent question but it probably was more appropriate to ask after the first offense. After four of them there is a pattern which would establish malice, no? That is unless four patents were accidently copied at one time and then the prducts on which they were based were not realeased all at once but instead released sequntially over a period of time.

That sounds like quite a stretch.

My other thought on your question is that maybe intention doesn't matter. There was IP used by Fairchild that was not theirs FIRST, and thus using it should cost them.

It is not uncommon for the patent lawyers to rewrite an inventor's description of his/her invention, mainly because patents are so interwoven with our legal system. The claims of the patent, which define the inventor's right to exclude, are essentially legal statements, sort of like minature laws which tell everyone what is protected. I personally think that a patent should be written so that a jury of your peers can understand them but it is rare that a patent attorney will agree with me.

In any event, to answer your question, notice of infringement is a legal matter and like most legal matters there are a lot of court cases which must be looked at in order to understand what does and does not constitute notice. When patent lawers give notice of infringement to an alleged infringer it is usually a quite detailed document which describes (in a legal sense) where each and every element of at least one claim of the patent is found in the accused device.

For a very simple example if your patent claim 1 says "I claim an electronic circuit device having circuits A, and B and C" (A and B and C being circuits described in the patent) then the infingement notice will read something like "claim 1 element A is found on the circuit board of (the accused infringer's) product as implemented by IC U5, element B is found as implemented by IC U6 and element C is found as implemented by IC U7." Then when you get to the infringement trial your attorneys will argue to the jury that that letter (which by the time these things get to trial will likely have been sent years ago) was a sufficient notice to the accused infringer and the jury should find the infringer guilty of willful infringement. If they do then the judge can award up to treble damages.

Of course this is a gross oversimplification and you would have to sit through a few weeks of a patent infringement trial to actually get an understanding of how these trial arguments work. Most infringement trials involve several lawyers and each side will usually spend millions of dollars in legal fees.

thank you @lakehermit...makes sense...I am just curious how do you prove that willfullness in court...I have several patents in my name but after I wrote them the lawyers modified my writing so much that I can barely understand what they cover ;-)